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Ricoh Co. v. Nashua Corp.

U.S. Court of Appeals, Federal Circuit

February 18, 1999


Before Plager, Bryson, and Gajarsa, Circuit Judges.

The opinion of the court was delivered by: Per Curiam.

NOTE: Pursuant to Fed. Cir. R. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.


Nashua Corporation (Nashua) appeals from the judgment of the United States District Court for the District of New Hampshire that Nashua literally infringed claims 1 through 4 of U.S. Patent No. 4,878,603 (the '603 patent) assigned to Ricoh Company, Ltd., Ricoh Corporation, and Ricoh Electronics (collectively Ricoh) and that the '603 patent was not invalid. We affirm the district court's Conclusions as to infringement and validity of the '603 patent, and reject Nashua's arguments that it is entitled to equitable relief.


Ricoh manufactures and markets many different electronic products, including electrophotographic plain paper copiers. Ricoh also manufactures and markets toner cartridges for these copiers through its various subsidiaries. Nashua manufactures and sells toner cartridges and toner for use in Ricoh's copiers and others. Nashua has various agreements with Ricoh and other copier manufacturers allowing Nashua to sell toner cartridges under the Ricoh and other brand names. Nashua also sells generic toner cartridges with no brand name.

On January 9, 1984, Ricoh filed patent application No. 598,022 (the '022 application) for a new type of toner cartridge, which eventually led to the issuance of U.S. Patent No. 4,611,730 (the '730 patent) on September 16, 1986.

AAt the time Ricoh filed the '022 application in 1984, Ricoh and Nashua were parties to a contract which provided that Nashua would distribute Ricoh copiers and toner cartridges worldwide.

Nashua began to offer its own version of a Ricoh toner cartridge in 1985. The Nashua cartridge offered for sale in the United States during 1986-87 contained an internal spiral guide rib on the inner surface of the cartridge as well as a removable gear ring. At a business meeting between Ricoh and Nashua in 1987, Ricoh informed Nashua of the '730 patent covering various types of toner cartridges. Nashua consulted its patent attorney to determine whether its products infringed the '730 patent. Nashua's attorney advised that, while Nashua may not necessarily infringe the '730 patent for various reasons, Nashua could design around the patent claims by eliminating the removable gear ring and by eliminating the internal spiral guide rib from the Nashua cartridge. Nashua subsequently redesigned its toner cartridge in accordance with these recommendations.

In June 1987, Nashua's representatives met with Ricoh's representatives at which time Nashua explained that it was redesigning its toner cartridge by eliminating the internal spiral rib and redesigning the gear ring to avoid infringing the '730 patent. Later that month, Ricoh asked Nashua to send it a sample of the redesigned product for review. Nashua sent a prototype of the redesigned cartridge shortly thereafter. Nashua continued development of the new redesigned toner cartridge, spending approximately $71,390 in November for new manufacturing molds. Nashua discontinued sales of the spiral walled cartridge and began selling the new toner cartridges in 1988.

Meanwhile, on May 23, 1986, Ricoh filed continuation application No. 866,414 (the '414 application) as a continuation of the '022 application. On April 8, 1988, Ricoh filed continuation application No. 179,626 (the '626 application) as a continuation of the '414 application. The '626 application eventually matured into the '603 patent on November 7, 1989. The claims of the '603 patent eliminated the limitations of the internal spiral guide rib and the removable gear ring which had limited the '730 patent.

At a meeting between Nashua and Ricoh in February of 1989, before the '603 patent issued, Ricoh notified Nashua of the existence of the '626 application and offered to provide Nashua with a copy of the claims of that application. Nashua refused to review those documents. In early 1990, Nashua and Ricoh terminated their contractual relationship for reasons unrelated to this patent litigation.

In April 1994, Ricoh filed suit against Nashua alleging infringement of the '603 and '730 patents. On November 8, 1994 the U.S. Patent and Trademark Office (PTO) issued reexamination certificates confirming the patentability of claims 1-14 of the '603 patent. The '730 patent was dropped from the present litigation by stipulation of the parties. On March 31, 1997, the United States District Court for the District of New Hampshire found that Nashua's redesigned toner cartridge infringed claims 1-4 of the '603 patent. The district court further found that the '603 patent was not invalid for failure to disclose the best mode and that Ricoh was not barred from recovery under the doctrines of equitable estoppel, intervening rights, or patent misuse. This appeal followed.


This court is presented with four issues on appeal. First, Nashua argues that it is entitled to intervening rights for the toner cartridge design developed and marketed during the pendency of the '626 continuing application. Second, Nashua argues that the doctrine of equitable estoppel precludes a finding of infringement of the '603 patent. Third, Nashua argues that the '603 patent is invalid for failing to disclose the best mode. Finally, Nashua contends that the '603 patent is invalid because it was misused by Ricoh through an unlawful tying arrangement.

A. Intervening Rights

The district court held that Nashua was not entitled to the equitable defense of intervening rights because filing a patent application for the purpose of excluding a competitor's product from the market is expressly permissible. See Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 874, 9 USPQ2d 1384, 1390 (Fed. Cir. 1988). Stating that the '603 continuation patent complied with "all statutes and regulations," the district court rejected Nashua's contention that Ricoh circumvented the mandates of the reissue statute and therefore Nashua should be entitled to intervening rights.

On appeal, Nashua contends that it is entitled to intervening rights for the products it developed during the pendency of the '626 application because the '603 patent broadened the claims of the '730 patent over two years after the issuance of the parent patent by using a continuation application, thus impermissibly circumventing the statutory mandates of a reissue proceeding. *fn1

Ricoh responds by stating that, in explicitly granting intervening rights in the context of reissue patents in the Patent Act and not in the context of continuing applications, Congress has at least implicitly rejected the notion that these separate methods of broadening patent claims are to be treated the same. Ricoh also points to the recent amendments to sections 120 and 252 as further evidence that Congress could have provided for intervening rights in the context of continuing applications if it wanted to do so. *fn2

We agree with Ricoh. Section 120, governing continuation applications, does not contain any time limit on an applicant seeking broadened claims. In contrast, section 251, governing reissue proceedings, does contain a specific time limit of two years. Moreover, Congress specifically provided for intervening rights in section 252 of the reissue statute, whereas Congress made no such provision for intervening rights in the context of continuation applications. "[A] limit upon continuing applications [i.e., similar to the two-year limit in reissue proceedings] is a matter of policy for Congress, not for us." In re Hogan, 559 F.2d 595, 604 n.13, 194 USPQ 527, 536 n.13 (CCPA 1977). *fn3

In addition, we have recognized the practice of filing continuation applications containing claims broader than those in a parent application, subject to double patenting objections, in order to encompass a competitor's product. See, e.g., Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 871 F.2d 1054, 1065, 10 USPQ2d 1257, 1265 (Fed. Cir. 1989) (citing Kingsdown, 863 F.2d at 874, 9 USPQ2d at 1390). Accordingly, absent congressional indication that intervening rights are to be applied in the context of continuation applications, we reject Nashua's argument that we should judicially adopt equitable safeguards, in contravention of established precedent, when Congress itself has declined to do so.

A. Equitable Estoppel

While equitable estoppel is not limited to a particular factual situation, or subject to simple or hard and fast rules, we have articulated a three-part test to guide courts in determining whether the doctrine of equitable estoppel is to be applied to bar recovery. See A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1041, 22 USPQ2d 1321, 1335-36 (Fed. Cir. 1992) (en banc). First, the alleged infringer must show that the patentee, through misleading conduct, led the alleged infringer to reasonably believe that the patentee did not intend to enforce its patent against the infringer. Second, the alleged infringer must demonstrate reliance on that conduct. Finally, the alleged infringer must be materially prejudiced if the patentee is permitted to enforce its patent against the alleged infringer. See id. at 1028, 22 USPQ2d at 1325. In order to prevail, each of these factors must be shown by a preponderance of the evidence. See id. at 1045-46, 22 USPQ2d at 1338-39.

The district court held that, even assuming that Ricoh's conduct supported a reasonable inference that it did not intend to enforce its patent claims against Nashua, Nashua did not prove a "causal nexus between Ricoh's delay or misleading conduct and Nashua's decision to go forward with it [sic] smooth-walled cartridges," and thus Nashua failed to satisfy the second prong of the Aukerman test. We review the decision of the district court for an abuse of discretion. See id. at 1028, 22 USPQ2d at 1325.

Nashua argues that Ricoh's silence following the provision of samples of the redesigned product in June 1987 permits a reasonable inference that Ricoh did not intend to enforce its patent rights against the redesigned cartridges. See Scholle v. Blackhawk Molding Co., 133 F.3d 1469, 1472, 45 USPQ2d 1468, 1471 (Fed. Cir. 1998) (finding that plaintiff patentee was equitably estopped from asserting its patent where the plaintiff had previously made an accusation of patent infringement followed by silence after inspection of defendant's redesigned product). As a result, Nashua argues that its decision to move forward with production of the redesigned smooth-walled cartridges in November 1988 was made at least in part in reliance on the inference that Ricoh had accepted Nashua's redesign as noninfringing.

The law is clear that a party can be misled by inaction. See id., 45 USPQ2d at 1471; Aukerman, 960 F.2d at 1042, 22 USPQ2d at 1336 ("[E]quitable estoppel may arise where, coupled with other factors, a patentee's 'misleading conduct' is essentially misleading inaction."). However, Nashua fails to apprehend the difference between inaction in light of an issued patent, as was the case in Scholle, and inaction in light of a pending patent application, as is the case here. The cases Nashua cites involved a patentee's failure to object to a product believed to infringe an issued patent, not a pending patent application at issue here. When Nashua disclosed to Ricoh the redesigned cartridge in June 1987, the '603 patent had not issued. Until September 1989, when the '603 patent did issue, Ricoh had no right to object to Nashua's design and cannot now be estopped for failing to speak up. See Aukerman, 960 F.2d at 1043, 22 USPQ2d at 1337 ("[S]ilence alone will not create an estoppel unless there was a clear duty to speak ...."). *fn4

Additional interactions between the parties also support the district court's refusal to apply equitable estoppel. Even though it was under no duty to do so, Ricoh disclosed to Nashua in February 1989 the existence of the application from which the '603 patent later issued and even offered to provide Nashua with a copy of the pending claims. Although Nashua was under no obligation to do so, instead of using the opportunity to plan the future course of its products, Nashua refused to review the claims in the application. Also, in September 1992, Ricoh contacted Nashua about the possible infringement of the '603 patent. At that time, Nashua's patent counsel opined that the '603 patent was invalid, and Nashua subsequently proceeded to manufacture and market the redesigned toner cartridge.

Accordingly, the district court did not abuse its discretion by rejecting Nashua's argument that Ricoh was barred from recovery by the doctrine of equitable estoppel.

C. Best Mode

The district court held that Nashua did not show by clear and convincing evidence that the inventors knew that a foam gasket located between the cartridge and the copier was the best mode of practicing the invention, thereby triggering their duty to disclose this mode in the written description of the patent in accordance with 35 U.S.C. § 112, ¶ 1 (1994). The district court found that the inventors thought that a "face seal" was the best mode of practicing the invention, and that the only reason that a foam gasket was used or contemplated was for cost savings during mass production. Moreover, the district court relied on the unrebutted testimony of the inventors that they actually preferred to do without the foam gasket, which could be done, albeit using more expensive manufacturing techniques. The district court found that, while the commercial embodiment was potentially relevant to what the inventors thought was the best mode, it was more relevant of the best and cheapest mode of manufacturing the cartridge, not necessarily of practicing the invention. We review a district court's finding of whether the patentee has complied with the best mode requirement for clear error. See Spectra-Physics, Inc. v. Coherent, Inc., 827 F.2d 1524, 1535, 3 USPQ2d 1737, 1745 (Fed. Cir. 1987).

Nashua asserts that the inventors knew that insertion of a foam gasket between the cartridge and the copier was necessary to make the invention cost effective to mass produce and that the inventors also knew that mass production was critical to any type of use of the invention. The failure to disclose the foam gasket in the written descriptions of the '730 and '603 patents, according to Nashua, violates the best mode requirement of 35 U.S.C. § 112, ¶ 1.

The inventor's unrebutted testimony was that the preferred method of practicing the invention was to use a face seal only. The inventors further testified that a foam gasket was used only to reduce the manufacturing cost of carefully molding the cartridge at lower tolerances. The best mode requirement does not require that every mode for producing the patented invention be disclosed. Nor does it require disclosure of the best method of mass producing the invention. See Christianson v. Colt Indus. Corp., 822 F.2d 1544, 1563, 3 USPQ2d 1241, 1255-56 (Fed. Cir. 1987). The inventor is only required to disclose his or her own best mode contemplated of practicing the claimed invention at the time the application for the patent was filed. See United States Gypsum Co. v. National Gypsum Co., 74 F.3d 1209, 1212, 37 USPQ2d 1388, 1390 (Fed. Cir. 1996). To require disclosure of methods of mass production as advocated by Nashua would "turn a patent specification into a detailed production schedule, which is not its function." Wahl Instruments, Inc. v. Acvious, Inc., 950 F.2d 1575, 1581, 21 USPQ2d 1123, 1128 (Fed. Cir. 1991). We therefore cannot say that the district court's finding that the inventors contemplated the best mode of the invention to operate with a face seal rather than a foam gasket constitutes clear error.

D. Misuse

Nashua finally argues that the '603 patent is unenforceable because Ricoh misused the patent to effect an illegal tying scheme. Specifically, Nashua alleges that Ricoh conditioned the sale of patented toner cartridges on the purchase of non-patented toner within the cartridges. Nashua further alleges that Ricoh conditioned the sale of patented toner cartridges on an agreement not to purchase, use, or sell the products of a competitor.

"[T]he essential characteristic of an invalid tying arrangement lies in the seller's exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms." Jefferson Parish Hosp. v. Hyde, 466 U.S. 2, 12 (1984). "[A] tying arrangement cannot exist unless two separate product markets have been linked." Id. at 21. In the context of patent misuse, "the nature of the claimed invention [is] the basis for determining whether a product is a necessary concomitant of the invention or an entirely separate product." Senza-Gel Corp. v. Seiffhart, 803 F.2d 661, 670 n.14, 231 USPQ 363, 370 n.14 (Fed. Cir. 1986). The district court held that Nashua's tying claim failed because Nashua could not show that unpatented bulk toner and the patented cartridges could be sold separately. The district court pointed to the fact that toner is not only explicitly contemplated in the claims of the patent, but also a practical necessity in selling toner cartridges. Based on the evidence presented, the district court did not clearly err in finding that Nashua had failed to demonstrate that the two products were "separate," thus failing to establish an unlawful tying arrangement constituting misuse of the '603 patent.

Nashua also contends that Ricoh conditioned the sale of its patented toner cartridge on an agreement not to purchase, use, or sell the products of a competitor. In support, Nashua points to sales agreements between Ricoh and its dealers known as the Sole Source Blanket Pricing Agreement (BPA) or the Carton Quantity Contract Agreement (CQC). The BPA offers Ricoh products to its sole source dealers at a lower price than it does its non-sole source customers. The CQC offers discounts to those customers who agree to buy a specified minimum quantity. The district court found that neither the BPA nor the CQC constituted a refusal to sell toner cartridges to those unwilling to enter into these agreements. The district court also found that there was no evidence to show that Ricoh ever refused to sell to a buyer who also purchased a competitor's products. The district court found that these agreements were no more than a savvy marketing scheme designed to generate savings from shipping in large quantities at regular intervals. The record does not disclose any conditioning of the type Nashua suggests. Thus, we agree with the district court that Nashua has not met its burden of proving misuse of the '603 patent.


For the foregoing reasons, the judgment of the district court is affirmed.

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